In an opinion issued yesterday, Judge Scheindlin denied the motion to dismiss claims under the Alien Tort Statue against Ford, GM and IBM, finding that two recent Supreme Court rulings had undermined the Second Circuit’s prior decision that corporations could not be liable under the statute. The case, In re South Afican Apartheid Litigation, accuses the defendants of aiding and abetting violations of the ATS by providing military and computer equipment to the apartheid regime. In 2009, the defendants had sought a writ of mandamus of Judge Scheindlin’s decision allowing the ATS claims to go forward. Before ruling, the Second Circuit decided the Kiobel case, in which it held that the ATS did not cover corporate defendants (Kiobel I). That case went to the Supreme Court, which ultimately decided the case on different grounds — whether the ATS could apply extraterritorially — declining to hold that the ATS did not apply to corporations (Kiobel II).

Two days after the Supreme Court’s ruling, the Second Circuit denied defendants request for a writ of mandamus, and remanded to the district court, stating that because “[t]he opinion of the Supreme Court in Kiobel [II] plainly bar[red] common-law suits like this one, alleging violations of customary international law based solely on conduct occurring abroad, . . . defendants will be able to obtain . . . dismissal of all claims . . . through a motion for judgment on the pleadings.” Judge Scheindlin disagreed.  After surveying the post-Kiobel I case law, including Kiobel II and another Supreme Court decision, Judge Scheindlin held that the Second Circuit’s opinion in Kiobel II — a “stark outlier” in the landscape of federal court decisions on the ATS — had been “undermined.”

The Supreme Court’s opinions in Kiobel II and Daimler directly undermine the central holding of Kiobel I – that corporations cannot be held liable for claims brought under the ATS. The opinions explicitly recognize that corporate presence alone is insufficient to overcome the presumption against extraterritoriality or to permit a court to exercise personal jurisdiction over a defendant in an ATS case, respectively. By necessity, that recognition implies that corporate presence plus additional factors can suffice under either holding. The standards laid out in Kiobel and Daimler for overcoming the presumption against territoriality and exercising personal jurisdiction under a longarm statute are stringent. They may be difficult to meet in all but the most extraordinary cases.  But the Supreme Court has now written two opinions contemplating that certain factors in combination with corporate presence could overcome the presumption against extraterritoriality or permit a court to exercise personal jurisdiction over a foreign corporation in an ATS case. This language makes no sense if a corporation is immune from ATS suits as a matter of law. The Supreme Court’s opinions in Kiobel II and Daimler cannot be squared with Kiobel I’s rationale.

Judge Scheindlin denied the defendants motion to dismiss and granted the plaintiffs’ motion to amend their comlaint, in which they must “make a preliminary showing that they can plausibly plead that those defendants engaged in actions that ‘touch and concern’ the United States with sufficient force to overcome the presumption against the extraterritorial reach of the ATS.”